Iowa Court of Appeals Upholds Iowa Cross Tier Ownership Law

The Iowa Court of Appeals has upheld a district court decision that upheld the decision of the Iowa Alcohol Beverages Division to deny a beer retail permit renewal due to a violation of the Iowa laws prohibiting ownership across the supplier, distributor and retailer tier.

The opinion authored by Judge Vogel  dismissed the constitutional challenges (Procedural Due Process and Equal Protection) and upheld the law on grounds similar to the opinion below.   The Court of Appeals opinion slightly differed from the trial court and vacated the part of the trial court decision that said the law was “unambiguous” due to a previous ruling that was not appealed.  Even with the “ambiguous” determination, the court noted that Iowa ABD correctly applied the statute to further the intention of the legislature as well as Iowa Supreme Court’s previous rulings that the “enactment of section 123.45 was to maintain the independence of the various levels of the liquor industry and to prevent tied-house arrangements.”

(Previous Post) Iowa Wins Challenge to Cross Tier Ownership Laws

The State of Iowa has won a challenge by a beer retailer whose license was not renewed when the state learned that the retailer was owned in part by a winery. In New Midwest Rentals, LLC d/b/a Des Moines Valero #204 vs. Iowa Department of Commerce, Alcohol Beverage Division Iowa state district court judge David May ruled that the division’s previous administrative order was consistent with the plain language of Iowa Code Chapter 123. Therefore, the ABD’s order was not based “upon an irrational, illogical, or wholly unjustifiable interpretation” of Chapter 123. Iowa Code § 17A.19.  The court noted, “There is no dispute that Mr. Forsythe is a “person engaged in the business of manufacturing wine.” Therefore, under the plain language of section 123.45, Mr. Forsythe cannot hold a “retail beer permit.” Additionally, he is prohibiting from maintaining an “ownership” or “operation[al]” relationship with a “permittee authorized under [Chapter 123] to sell at retail.” Therefore, he cannot own or operate Petitioner, whose class “C” beer permit authorizes Petitioner “to sell beer to consumers at retail for consumption off the premises.”